A study by the Federal Reserve Bank of Cleveland concluded that Securum eventually returned about 58 percent of that upfront cost to the Swedish treasury, though in depreciated krona.
That does not mean Sweden has escaped the current banking turmoil unscathed. As credit markets froze last fall, it created a financial stabilization package intended to ensure new lending from banks. Only Swedbank initially signed up for the plan. Other banks have moved to raise capital in the market.
To make Securum work in the 1990s, the Swedish state had to become a specialist in such diverse industries as chemicals, biotechnology, office supplies, aerospace industry services and, as would certainly be the case in the United States, real estate.
Chunks of real estate from Stockholm to London to Atlanta had been collateral for loans and occupied 70 percent of the portfolio of Securum.
“As a result of the bubble, a lot of Swedish real estate people thought they were the best in the world,” recalled Mr. Thunell, who now heads the International Finance Corporation, a part of the World Bank.
Securum owned the Australian Embassy building in Myanmar, as well as a guitar that was said to have belonged to John Lennon and a company that employed military advisers in Yemen.
Since the whole idea was to eventually put Securum out of business, managing it required a deft touch that rewarded financial success with incentives for employees but also stressed their work’s nature as a public trust.
“I think people felt a tremendous responsibility for the taxpayer,” Mr. Thunell said. “But it was extremely stimulating from an intellectual and business standpoint because you were doing completely new things.”
Securum hemorrhaged money in its first year in business, which was 1993, but recovered quickly, as savvy deal-making combined with a swift pickup in the Swedish economy created markets for what once seemed so worthless. Early on, Securum sold a chemical company it controlled, Nobel Industries, to Akzo of the Netherlands, to form the largest paint producer in the world. With 18.2 percent of the combined company, Securum later reaped a hefty profit when it sold out.
Property proved less nettlesome than feared as the Swedish economy recovered. Pandox, a Swedish hotel company, was privatized and finds itself today trolling for distressed assets in North America.
There is no guarantee the Obama administration will be so fortunate, with a global economy facing its most severe downturn in decades.
If there is any criticism of how Sweden handled the bad bank, it is that it might have managed an even better return if Securum had sat on its assets longer.
Swedish law envisioned a 15-year life span for Securum when it was created in 1993. It closed four years later.